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2022 (10) TMI 1100 - AT - Income TaxAddition u/s 68 - unexplained unsecured loan assessee company failed to establish the creditworthiness of all lenders and identity of five lenders therefore genuineness of transaction remained unexplained - CIT-A deleted the addition - HELD THAT:- As on the basis of documents and details filed in respect of all nine (9) depositors, the assessing officer has accepted only one depositor as explained even though she was not produced before assessing officer. Hence we note that approach of AO is arbitrary. We note that assessee furnished the copy of respective returns of income with final accounts of Lenders wherein transactions have been duly found reflected. Lenders have been regularly assessed to tax. In the case of all the lender; assessment u/s. 143(3) for AY.2012-13 have been completed in Surat I.T department. Thus, creditworthiness has been duly examined by the department under scrutiny. Copies of relevant assessment orders have been filed before ld CIT(A). Hon'ble Gauhati High Court in the case of Jalan Timber [1996 (8) TMI 83 - GAUHATI HIGH COURT] has held that if assessee and creditors both have shown amount in their income tax return, no addition u/s 68 can be made if the returns of creditors have been accepted by Income Tax Officer - the case of creditor has been accepted by the department. Therefore, we note that all three parameters as laid down u/s 68 of the Act, i.e. (i) Identity of the depositors; (ii) Genuineness of the transactions; and (iii) Creditworthiness of the depositors, have been fulfilled by the assessee in respect of all the seven (7) depositors except in the case of Smt. Rekhdben Bodra, Prop. Gurukrupa Enterprise to the extent deposited by cash (in her Bank A/c) which remained unexplained and therefore, the assessing officer is not justified in treating the entire amount of loans received by the assessee as unexplained cash credits u/s 68 of the Act, therefore, ld CIT(A) deleted the addition of Rs.5,90,90,000/- and sustained the addition of Rs.4,10,000/-.That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed. CIT(A) restricting the disallowance on account of business expenses - HELD THAT:- CIT(A) noted that looking to nature of expenses incurred by CASH, the involvement of non-business purpose & personal purpose cannot be denied and also because expenses are not supported by vouchers/bills - CIT(A) took a view that it reasonable & fair to both parties to sustain disallowance @ 5% of such expenses i.e. Rs.49,810 + Rs.16,20,411 = Rs.16,70,221/- which works out to Rs.83,511/-. CIT(A) also noted that ‘ROC’ fee incurred for increase in Authorized Capital was of the capital field and hence deserve to be disallowed. Therefore, total disallowance worked out by ld CIT(A) was to the tune of Rs.2,85,011/- (Rs.2,01,500 + Rs.83,511). We do not find any infirmity in the conclusion reached by the ld CIT(A), hence we approve and confirm the findings of ld CIT(A).
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